By Habeeb Ibrahim
Senator Mukhail Adetokunbo Abiru, Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, has called for the establishment of a permanent Fiscal-Monetary Policy Coordination Council to strengthen coordination between Nigeria’s fiscal and monetary authorities.
Abiru made the proposal in a recent contribution following the signing of a Memorandum of Understanding between the Federal Ministry of Finance and the Central Bank of Nigeria on fiscal-monetary policy coordination, as well as the CBN’s decision to reduce its Monetary Policy Rate from 26.5 per cent to 23 per cent.
The CBN’s Monetary Policy Committee, at its September 2026 meeting, reduced the MPR by 350 basis points to 23 per cent.
The Federal Government and the CBN had also signed an MoU providing for regular consultation, information sharing and joint assessment of policies.
The arrangement is aimed at improving inflation management, government borrowing and liquidity management, while protecting private-sector access to credit.
Abiru said the agreement was significant because fiscal and monetary policies, although administered by separate institutions with different mandates, ultimately affect the same economy.
He explained that fiscal policy influences economic activity through taxation, government spending and borrowing, while monetary policy affects financial conditions through interest rates, liquidity, credit conditions and the foreign exchange environment.
According to him, coordination between both arms of economic management is necessary to prevent policies from working at cross-purposes.
However, Abiru stressed that coordination should not amount to interference with the CBN’s operational independence in conducting monetary policy.
He therefore proposed that the current arrangement should go beyond the MoU and become an institutional framework through a permanent Fiscal-Monetary Policy Coordination Council.
He said such a council should comprise the Ministry of Finance, the CBN and other relevant economic management institutions, with clearly defined responsibilities and regular meetings.
Among the areas he proposed for the council’s consideration are macroeconomic forecasts, debt-management implications, liquidity conditions, inflation risks, foreign exchange developments and the financing implications of major government programmes.
The proposal comes as Nigeria’s monetary authorities begin easing policy after a period of tight monetary conditions.
The CBN had maintained the MPR at 26.5 per cent before cutting it to 23 per cent in September 2026.
Abiru said the policy shift should ultimately translate into improved access to affordable credit for businesses and households, while fiscal and monetary authorities maintain policy consistency.
He also argued that institutionalising coordination would reduce dependence on the personalities occupying key economic policy positions and provide a more predictable framework for economic management.
